Economic policy uncertainty and the demand for labor: Evidence from the online job postings of Chinese firms

Abstract

This paper examines the impact of economic policy uncertainty (EPU) on labor demand. Using data from a Chinese online job posting site, this study empirically investigates how EPU affects firms' hiring behavior. The results suggest that EPU has overall negative effects. Firms tend to reduce job postings in times of increasing policy uncertainty. More particularly, the demand for skills such as teamwork, personnel management, project management, and customer service declines, while individual qualities become more important to enterprises. The study also reveals that there is a positive relationship between EPU and the educational background required in firms' job ads. Further analysis indicates that non-state-owned enterprises, those with poor internal control quality, smaller scale, greater industry competitiveness, and those in non-high-tech industries are more significantly affected by EPU in hiring. This research provides empirical support and policy recommendations for the government to maintain employment stability and stimulate enterprise labor demand.